KOF Business Situation Indicator: Economy is Losing Steam

The further slowdown primarily results from the reports of the manufacturing enterprises. In this industry, the indicator has also declined for the sixth consecutive month (see T 2). In the financial and insurance services sectors, the indicator dropped after following an upward tendency in the preceding month. In the retail trade and project engineering sectors, the indicators have more or less stabilised. The situation even improved further in the construction industry. Wholesalers, hotel and catering companies and the other service providers were last surveyed in April. At the time, the Business Situation Indicator had dropped in all three sectors.  

At the regional level, the Business Situation indicator declined in Espace Mittelland, Eastern Switzerland and Ticino, and to a smaller degree in the Lake Geneva region (see G 7). In North-West Switzerland and the Zurich region, the business situation changed very little in May. By contrast, the situation improved slightly in Central Switzerland.

Explanation:

Graph G 6 presents the KOF business situation across all sectors covered by the survey. The business situation in sectors which are surveyed on a quarterly basis is kept constant during the intervening months.

Graph G 7 presents the business situation in the main regions pursuant to the Federal Statistical Office (FSO). The regions are coloured according to business situation. The arrows in the regions indicate the change in the business situation compared to the previous month. An upward-pointing arrow, for instance, indicates that the situation has improved over the previous month.

The KOF business situation is based on more than 4,500 reports from businesses in Switzerland. Each month, companies are surveyed in the economic sectors of industry, retail trade, construction, project engineering and financial and insurance services. Businesses in the hotel and catering sector, wholesalers and other service providers are surveyed on a quarterly basis in the first month of each quarter. Among other questions, the companies are asked to assess their current business situation. They may class their situation as “good”, “satisfactory” or “bad”. The balance of the current business situation is the percentage difference between the answers “good” and “bad”.